Yesterday, Today and Tomorrow of Shenzhen Huaqiangbei (Part II)（Part Four）

Perspectives|Perspectives|

2023-09-12 09:59:27 1093

4.5 Technological innovation and value core

Huaqiangbei has a tradition of innovation. SEG Plaza’s breakdown sales and the small counter rental of the previous Huaqiang market can be regarded as a business model innovation. In the era of copycat mobile phones, dual-card mobile phones, reverse charging, long time standby and other technologies were developed on the basis of MTK solutions. Unfortunately, only a minority of the companies kept developing and became companies with systematic competitiveness.

By virtue of the hardware advantage of Huaqiangbei, Longhorn, Hasee, TP-LINK and other companies arising from Huaqiangbei made breakthroughs in terms of both technology and business by integrating systems with software in large scale to reduce the marginal costs of software quickly and adopting the strategy “using hardware as the price driver and software as the value driver”.

There is another development model in Huaqiangbei. Longsys, Kinghelm, SUP Meilong, Hottech, Slkor, and Hua Guan Semiconductor expanded to the upstream of the industry chain. The companies adopting this model have the right to pricing and control over the supply chain, and they can also accumulate knowledge engineering and research and develop new products to keep iterating. At the top of the value chain, they have more chips when gaming with the upstream and downstream. Although it is hard at the early stage, there will be a long-term stable income at the late stage. Longsys has gone public, which is the optimal development path for SMEs in Huaqiangbei.

5. Manager's dilemma and breakthrough

In recent years, the domestic and foreign economic and political situations have undergone significant changes. The development of Huaqiangbei has been hindered. Since the roads in Huaqiangbei was closed for building the subway in 2016, Huaqiangbei experienced a slump until 2023. High-end talents necessary for the development of Huaqiangbei are insufficient, the companies in Huaqiangbei have no industrial strategic depth, high rents force away the fast-growing companies with large scale, the leading companies cannot provide sufficient support, small companies are fragmented without core competitiveness, there are no big companies matching with the commercial scale of Huaqiangbei, there is no shopping mall that can attract people in Huaqiangbei, the government's industrial guidance policies are not in place, the overall innovation is insufficient, the city's urban planning falls behind, Internet platforms rise with the characteristics of decentralization, and buyers’ dependence on Huaqiangbei and other problems have been exposed, which can be seen from the vague positioning given by the Huaqiangbei Museum!

At the early stage, Huaqiangbei was a spontaneous market, and its success was driven by many elements of market economy converged unintentionally. At the current stage, it is the top priority to play the role of "active government", research the core business elements of Huaqiangbei, and then optimize the resources allocation of market economy, guide SMEs to carry out technological innovation and business model transformation, help improve the overall quality of the bosses in Huaqiangbei, help the SMEs in Huaqiangbei to expand their scale, and help Huaqiangbei regain popularity. When will popularity and wealth return to Huaqiangbei?

Shortage and outflow of high-end talents is a big problem. The bosses of SMEs in Huaqiangbei are the first generation of winners in Shenzhen, but now they are at loose ends because of business model iteration and intensified competition. There is no official development seminar, training, policy, or financial support from the Futian District government. Huaqiang Group and SEG Group, the "Huaqiangbei duo", reduced to landlords who try every means to increase rents. Companies have to leave Huaqiangbei when they develop to a certain extent. They failed to use the advantages of the industry chain to help companies grow into outstanding ones.

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Kinghelm Connecting BDS Color Page

There is the "No.1 Electronic Street in China" and dozens of professional markets in Huaqiangbei, which attract people to Huaqiangbei during working hours on weekdays, mainly hardware engineers, purchasers and industry-related practitioners. "Huaqiangbei Business Circle" serves the surrounding residents and tourists, attracting people for Huaqiangbei during holidays and non-working hours. In addition, there are nearly 300,000 people working and living in Huaqiangbei for a long time. The huge and stable traffic is the basis of the prosperity of Huaqiangbei! Commodities, people and malls are the carriers of information and transactions. Without traffic and car parks, Huaqiangbei will not be a business center anymore! The attractiveness of the Huaqiangbei business district is decreasing, there are no star vendors like "Wanjia Department Store" and "Women's World", the scale and attractiveness of Jiufang Commercial Plaza and Century Link Mall is not enough, the old infrastructure and lack of operational capacity also cannot match with Huaqiangbei’s commercial volume. WORLD·COCO Park, MixC, Coastal City and other business districts suck away the consumer power. The government should use measures such as introducing leading companies in the industry chain and building first-class shopping malls to address these situations!

Leading companies of the industry chain not only drive the growth of local GDP, but also boost the development of various segments through the control of the supply chain and cultivate a batch of talents. Kodak have reshaped Rochester, NY, the city in which it is located. Kodak founded the University of Rochester, an excellent hospital system, and a museum. We can draw the same conclusion from Foxconn Zhengzhou, Henan Province and Xiaomi Xi'an, which employed large quantity of local college students! The Shoping Mall concept originated from the United States. The peak sales of shopping malls accounted for 35% of the total retail sales. Shopping malls can meet everyone’s needs. Wanda Plaza, MixC and other famous brands are the first choice for improving Huaqiangbei’s brand positioning, commercial scale and the city operation capability. Apple flagship shop, Xiaomi AIOT and other new business models can also be introduced to attract people to Huaqiangbei and consume!

Huaqiangbei Sub-district encourages the transformation and upgrading of the existing properties. But they don’t have foresight and unified planning. The parking difficulty, poor small traffic circulation and other problems are not solved. Huaqiangbei also faces the competition of South China City Electronics Market and Dongguan Fenggang JD Electronic City. Huaqiangbei introduced the electronic trading center of CECport, explored the headquarters economy model, and introduced Huaqiangbei Mi Home offline shop and DJI flagship shop. However, these initiatives have no effect on the huge Huaqiangbei. There is a lot of work to be done to vigorously use the financial resources of the central district Futian and the advantages of Hong Kong to support the excellent high and mid-end electronic companies in Huaqiangbei, attract the outstanding companies leaving Huaqiangbei to come back to Huaqiangbei and introduce leading companies in the industry chain with strong driving ability!

To be continued...

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Yesterday, Today and Tomorrow of Shenzhen Huaqiangbei (Part II)（Part Four）

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